The upcoming halving event for Bitcoin (BTC +1.01%) is now just two weeks away, roughly equivalent to around 2,000 blocks, as reported by The Block’s Bitcoin Halving Countdown page.
This estimation is based on Bitcoin’s average block generation time of 10 minutes, indicating a potential date of April 20 at approximately 1 p.m. ET. During Bitcoin’s next halving event, the reward for miners on the network will decrease from 6.25 BTC to 3.125 BTC per block.
Bitcoin halvings are programmed to occur automatically every 210,000 blocks, roughly every four years. Following a halving event, miners receive 50% fewer bitcoins as a reward for each block mined and added to the blockchain. Nevertheless, they continue to earn additional transaction fees for each block mined as usual.
Throughout Bitcoin’s history, there have been three halving events, which have reduced its block reward inflation from 50 BTC to 25 BTC in 2012, then to 12.5 BTC in 2016, and finally to 6.25 BTC at the last halving on May 11, 2020. In the long run, the total number of bitcoins in existence will never exceed 21 million.
These halving events will persist until the last bitcoin is anticipated to be mined around the year 2140, after which miners will solely earn from transaction fees.
Historically, Bitcoin halvings have been linked to significant fluctuations in the cryptocurrency’s price. While not directly causal, these events have frequently preceded substantial bull runs in the bitcoin market.
Concerns about whether the Bitcoin halving is “priced in” surface each time the event approaches. However, one data point suggests that it may be “priced in” this time.
“This is the first halving cycle where bitcoin surpassed its all-time high before the halving, indicating that the impact may have already been factored in by savvy traders,” noted Coinbase analysts David Duong and David Han.
Nevertheless, the analysts added that there remains a collective belief that the halving could drive prices higher, potentially sparking a rally.
As Bitcoin is now closer to an all-time high compared to previous halving events, the approval of spot ETFs has significantly altered BTC’s supply-demand dynamics, potentially influencing its price during and after the halving, as noted by Kaiko earlier this week.
According to Kaiko analysts, ETFs have witnessed robust overall inflows, suggesting a possible immediate positive price impact as supply continues to decrease. However, rapid outflows from ETFs could exacerbate selling pressure for the underlying asset during market downturns, although only one week of net outflows has been observed so far.
Coinbase analyst David Duong attributed the current bitcoin rally largely to this new phenomenon amidst spot ETF inflows and increasing institutional interest, which have “fundamentally altered” the bitcoin market. He emphasized that bitcoin’s response to the upcoming halving may not necessarily replicate its performance in previous cycles.
While outflows from Grayscale’s higher-fee GBTC fund seem to be slowing down, so too are the overall flows for spot Bitcoin ETFs since reaching a peak net daily inflow of $1.05 billion on March 12, coinciding with bitcoin’s latest all-time high of $73,836, according to The Block’s data dashboard.
March also marked a significant month for spot Bitcoin ETFs in terms of trading volume, nearly tripling February’s total to surpass $111 billion. However, daily volume has tapered off after reaching a record $9.9 billion on March 5, coinciding with bitcoin’s initial surpassing of its prior cycle peak of around $69,000, in tandem with the recent decline in bitcoin’s price.
